·Operating
expenses, excluding a $49.8 million
goodwill impairment charge in the year-ago quarter, were reduced by 19% to $14.9 million.

·Net
income improved significantly to $12.2 million, or $0.25 per share, compared to
a loss of $(46.5) million, or $(1.09) per share. The year-ago quarter included
a $49.8 million goodwill impairment charge.

·Adjusted
EBITDA improved 63% to $16.1 million.

“Our fourth quarter closed out a strong year highlighted
by solid demand for our entry-level RECON
series headsets, our new STEALTH 520
and STEALTH 420X+ wireless headsets
and good overall performance across the rest of our line,” said Juergen Stark,
CEO, Turtle Beach Corporation. “In fact, this strength continued to drive our
leading market share higher. Recent NPD data confirmed that our 2016 unit share
was up 90 basis points to 34.2%, while our revenue share rose slightly to 42.0%
compared to 41.9% in 2015.

“These results were achieved despite the overall console
gaming market slowing significantly and uncharacteristically this past holiday
season. We believe lower sales of marquee games, as well as the November 2016 debut
of PlayStation ®4 Pro and the yet-to-be-announced launch date of Xbox
Scorpio, disrupted the consumer’s typical holiday purchasing behavior. Despite this
softening, fourth quarter profitability exceeded our outlook due to a favorable
mix of new-gen to old-gen sales, gross margin-enhancing supply chain and logistics
improvements, as well as prudent operating expense management across the entire
business.

“In the fourth quarter we converted much of our HyperSound business to a license model
and wound down operating expenses to under $300,000 per month. While we are
still pursuing additional revenue-generating opportunities, including licensing
the technology for HyperSound Glass
and other applications, we plan to continue to reduce operating expenses to a
point where it becomes immaterial to our overall business.

“Our goals throughout 2017 will be focused on further
improving our overall profitability, which we believe will allow us to continue
to strengthen our balance sheet. We believe we have significant growth
opportunities in virtual reality, livestreaming, PC gaming and expansion
throughout China that we expect to continue to cultivate throughout the year,
with more significant investment planned for 2018.”

Fourth Quarter 2016 Financial Results

Net revenuein
the fourthquarter was
$82.2 million compared to $84.6 million in the year-ago quarter, and on a
constant currency basis, net revenue was
essentially unchanged. New-gen
headset sales in the fourth quarter were up 8%.

Gross
margininthefourth
quarter was up 760 basis points to 36.7% compared to 29.1% in the year-ago quarter.
Gross margin in the headset segment increased 630 basis points to 37.2% due to higher
margin new-gen headsets contributing 94% of revenues in the fourth quarter, up
from 86% during the same period in 2015, as well as supply chain and logistics
improvements.

Operating expenses in the fourth quarter, excluding a
$49.8 million goodwill impairment charge in the year-ago quarter, were reduced by
19% to $14.9 million compared to $18.3 million (excluding the charge mentioned
above) in the fourth quarter of 2015. The decline was due to continued cost management
across the business. Including the year-ago impairment charge, operating
expenses in the fourth quarter of 2015 were $68.1 million.

Netincome inthefourthquarter
improved significantly to $12.2million, or$0.25per
dilutedshare, comparedto a net loss of $(46.5) million, or $(1.09) per
diluted share, in the year-ago quarter. Excluding the aforementioned 2015 impairment
charge, net incomeinthefourthquarter of 2015 was $3.3 million, or $0.08per diluted
share. The year-over-year increase, even when excluding the
impairment charge, was due to the aforementioned gross margin improvements and
continued cost management. The fourth quarter of 2016 included approximately 6.8
million incremental shares compared to the year ago quarter, primarily due to
the February 2016 follow-on public offering of common stock and concurrent
private placement.

Adjusted EBITDA (as defined below in “Non-GAAP Financial
Measures”) on a consolidated basis increased 63% to $16.1 million compared to $9.9
million in the year-ago quarter. The improvement was primarily driven by strong
new-gen headset sales and successful cost management initiatives and supply
chain and logistics improvements. Adjusted EBITDA for the headset business was
up 23% to $17.2 million in the fourth quarter compared to $14.0 million in the
year-ago quarter.

Full Year 2016 Financial Results

Net revenuein
2016 increased 7% (up 9% in constant
currency) to $174.0million comparedto
$162.7 million
in 2015. The increase was due to
the success of the new-gen headset portfolio.

Gross
marginin2016 was
24.5% compared to 25.0% in 2015. The decline was due to non-cash intangible
asset amortization costs associated with the HyperSound Clear™ 500P launch, as well as a $7.1 million inventory
reserve associated with the HyperSound
restructuring. Gross margin in the headset segment increased 540 basis points
to 31.9% from 26.5% due to higher margin new-gen headsets contributing 92% of
revenues in 2016, up from 77% in 2015, as well as the supply chain and
logistics improvements.

Operating expenses in 2016 were comprised of headset-related
expenses of $46.6 million, HyperSound impairment
of $63.2 million and HyperSound-relatedexpenses of $10.5 million. Compared to
2015, headset operating expenses declined 10% and HyperSound expenses excluding the impairment decreased 24% due to
continued cost management across the business.

Net loss in 2016 was $(87.2) million, or $(1.79) per
diluted share, compared to a net loss of $(82.9) million, or $(1.96) per
diluted share in 2015. Excluding the goodwill and intangible asset impairment
charges, HyperSound restructuring
reserves and approximately $0.6 million for other restructuring charges, net
loss in 2016 was $(16.2) million, or $(0.33) per diluted share. This compares
to a loss of $(24.2) million, or $(0.57) per diluted share in 2015, which
excludes the goodwill impairment charge, as well as a $8.5 million non-cash
valuation allowance and $0.4 million for other restructuring charges. This
improvement was driven by the success of the new-gen headsets and prudent cost
management.

Adjusted EBITDA (as defined below in “Non-GAAP Financial
Measures”) was up significantly to $4.0 million, including investments of
approximately $10.4 million in the HyperSound
business, compared to adjusted EBITDA of $(11.4) million in 2015, which
included $13.8 million in HyperSound
investments. Adjusted EBITDA for the headset business increased over
500% to $14.4 million in 2016 compared to $2.4 million in 2015.

Balance Sheet Highlights

At December 31, 2016, the Company had approximately $6.2
million of cash and cash equivalents compared to $7.1 million at December 31,
2015. As a result of the Company’s $60 million revolving credit facility,
Turtle Beach generally does not hold a large cash balance.

As of December 31, 2016, total outstanding debt
principal was $69.7 million, which includes $35.9 million of revolving debt, $14.4
million in term loans and $19.4 million in subordinated notes, compared to $68.1
million in total outstanding principal debt at December 31, 2015.

2017 Outlook

For
the first quarterof2017,Turtle Beachexpectsnet revenueto range between $12-$13million
compared
to$24.0millioninthefirst quarterof2016. This reflects the
impact of higher-than-normal channel inventory due to the soft 2016 holiday
retail gaming sales environment. AdjustedEBITDAisexpectedto be
approximately $(8.5) million compared to$(6.3)millioninthe first
quarter of 2016.Netlossforthefirst quarterisexpectedto
range between $(0.24)-$(0.26) per diluted share,
compared to a net loss of $(0.26)per diluted share in the first quarter of 2016.

For
the full year 2017, Turtle Beach expects net revenue to range between $155-$160
million compared to $174.0 million in 2016. This reflects the higher channel
inventory impact on first quarter revenue and an approximate $6-$7
million year-over-year decline in old-gen headset sales, bringing this business
to a close in 2017. This also assumes no material revenue from HyperSound.The
Company expects to generate $10-$12 million in consolidated adjusted EBITDA in
2017 compared to $4.0 million in 2016. This includes an approximately $1
million expected adjusted EBITDA loss from HyperSound
in 2017. Net loss in 2017 is
expected to range between $(0.08)-$(0.12) per diluted share based upon 49.3 million
diluted shares outstanding, compared to a net loss of $(1.79) per diluted share in 2016 (or a loss of $(0.33) per diluted share
in 2016 excluding the goodwill and intangible asset impairment charges, HyperSound restructuring reserves and
other restructuring charges).

With respect to the Company's adjusted EBITDA outlook
for the first quarter and full year 2017, a reconciliation to its net loss
outlook for the same periods has not been provided because of the variability,
complexity and lack of visibility with respect to certain reconciling items
between adjusted EBITDA and net loss, including other income (expense),
provision for income taxes and stock-based compensation. These items cannot be
reasonably and accurately predicted without the investment of undue time, cost
and other resources and, accordingly, a reconciliation of the Company’s
adjusted EBITDA outlook to its net loss outlook for such periods is not
available without unreasonable effort. These reconciling items could be
material to the Company’s actual results for such periods.

Conference Call Details

TurtleBeachCorporationwillholdaconferencecall today, March
8,2017,at2:00p.m. Pacifictime(5:00
p.m.Eastern)todiscussits
fourth quarter and full year 2016 results.

Please dial-in 5-10 minutes prior to the start time of
the conference call and an operator will register your name and organization.
If you have any difficulty with the conference call, please contact Liolios at
(949) 574-3860.

The
conference call will be broadcast live and available for replay hereand via the investor
relations section of the Company’s website at www.turtlebeachcorp.com.

A
replay of the conference call will be available after 8:00 p.m. PT on the same
day through March 15, 2017.

Turtle Beach Corporation (http://corp.turtlebeach.com) designs innovative, market-leading audio
products. Under its award-winning Turtle Beach brand (www.turtlebeach.com), the Company is the clear market share leader with its
wide selection of acclaimed gaming headsets for use with Xbox One and
PlayStation®4, as well as personal computers and mobile/tablet
devices. Under the HyperSound brand (www.hypersound.com), the Company markets pioneering directed audio solutions
that have applications in digital signage and kiosks, consumer electronics and
hearing healthcare. The Company's shares are traded on the NASDAQ Exchange
under the symbol: HEAR.

Cautionary
Note on Forward-Looking Statements

This press release
includes forward-looking information and statements within the meaning of the
federal securities laws. Except for historical information contained in this
release, statements in this release may constitute forward-looking statements
regarding assumptions, projections, expectations, targets, intentions or
beliefs about future events. Statements containing the words “may”, “could”,
“would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”,
“target”, “project”, “intend” and similar expressions constitute
forward-looking statements. Forward-looking statements involve known and
unknown risks and uncertainties, which could cause actual results to differ
materially from those contained in any forward-looking statement.
Forward-looking statements are based on management’s current belief, as well as
assumptions made by, and information currently available to, management.

While the Company
believes that its expectations are based upon reasonable assumptions, there can
be no assurances that its goals and strategy will be realized. Numerous
factors, including risks and uncertainties, may affect actual results and may
cause results to differ materially from those expressed in forward-looking
statements made by the Company or on its behalf. Some of these factors include,
but are not limited to, risks related to the Company’s liquidity, the
substantial uncertainties inherent in the acceptance of existing and future
products, the difficulty of commercializing and protecting new technology, the
impact of competitive products and pricing, general business and economic
conditions, risks associated with the expansion of our business including the
implementation of any businesses we acquire, our indebtedness, the outcome of
our HyperSound strategic review
process and other factors discussed in our public filings, including the risk
factors included inthe Company’s most
recent Annual Report on Form 10-K and the Company’s other periodic
reports. Except as required by applicable law, including the securities laws of
the United States and the rules and regulations of the Securities and Exchange
Commission, the Company is under no obligation to publicly update or revise any
forward-looking statement after the date of this release whether as a result of
new information, future developments or otherwise.